Prion diseases are marked by cerebral accumulation of the abnormal isoform of the prion protein. A fragment of prion protein composed of residues 106-126 (PrP106-126) exhibits similar properties to full length prion and plays a key role in the conformational conversion from cellular prion to its pathogenic pattern. Soluble oligomers of PrP106-126 have been proposed to be responsible for neurotoxicity. However, the monomeric conformational space and initial oligomerization of PrP106-126 are still obscure, which are very important for understanding the conformational conversion of PrP106-126. In this study, replica exchange molecular dynamics simulations were performed to investigate monomeric and dimeric states of PrP106-126 in implicit solvent. The structural diversity of PrP106-126 was observed and this peptide did not acquire stable structure. The dimeric PrP106-126 also displayed structural diversity and hydrophobic interaction drove the dimerization. To further study initial oligomerization of PrP106-126, 1 µs conventional molecular dynamics simulations of trimer and tetramer formation were carried out in implicit solvent. We have observed the spontaneous formation of several basic oligomers and stable oligomers with high β-sheet contents were sampled in the simulations of trimer and tetramer formation. The β-hairpin formed in hydrophobic tail of PrP106-126 with residues 118-120 in turn may stabilize these oligomers and seed the formation oligomers. This study can provide insight into the detailed information about the structure of PrP106-126 and the dynamics of aggregation of monomeric PrP106-126 into oligomers in atomic level.